The Hidden Cost of Poughkeepsie's High Property Taxes

It doesn’t take a degree in economics to know that rising property taxes put a strain on homeowner’s budgets. What is not as well understood is the effect high taxes have on the value of homes when the owner sells.  In high taxed areas like the Town of Poughkeepsie the cost to the homeowner is measured in tens of thousands of dollars.

Let’s consider two houses – one in LaGrange and one in Poughkeepsie. These houses share the same schools, shopping conveniences, and commutes.  If both houses were for sale, the same buyers would look at each as they offer similar utility.  In fact, the assessors for both homes have assessed them exactly the same - $369,500.

There is one difference however – the property tax bill.   The Poughkeepsie house has a tax bill of $14,763 while the LaGrange house tax bill is $12,024.  That means the Poughkeepsie homeowner is paying $228 per month more than the LaGrange owner.

The higher taxes affects homeowners in two ways.  The first is obvious.  If you are paying an extra $228/month to the town, that’s money you are not spending in your community or investing for your future.    It’s an additional expense, like a car payment, but without the car. 

The second cost is far greater.  It is the effect the higher tax burden has on the price a buyer will pay for the house.

There are three variable costs that affect a buyer’s ability to pay – the price of the house, the mortgage interest rate, and the taxes.  These costs are interrelated.  Because most buyers are limited in what they can afford to pay for housing each month, an increase in one reduces the amount available for the other two.  

So how does this affect Poughkeepsie homeowners?

Because of the higher taxes, buyers are not able to pay as much for the house in Poughkeepsie as they could pay for a similar house in LaGrange.  The extra money being paid in taxes reduces buyers buying power.  To have the same monthly payment as the $369,500 LaGrange house, a buyer would only be able to pay $323,500 for the house in Poughkeepsie – a difference of $46,000!

Incredibly, a buyer could offer the LaGrange owner $23,000 more than they would pay the Poughkeepsie seller and still have a monthly payment $114 less.  That’s a win for the LaGrange seller as well as the buyer.  The loser is the Poughkeepsie homeowner.

When inventories are low the effect of high taxes on house prices may not be apparent. But it’s not always going to be a seller’s market.  The time will come when sellers will have to compete for buyers.  When that time comes, homeowners in Poughkeepsie will be at a severe disadvantage because due to high taxes, a homebuyer’s dollar in Poughkeepsie is worth less than a dollar anywhere else.

My New Book 'The 30-Second Time Out '- Available FREE June 14-15

The most effective action a real estate agent can take to increase their listings, sales, and income is to create and then put into action an effective business plan.    If you took the time to put a plan together for 2019, congratulations!

The unfortunate reality however, is even agents that have plans often wander from them and don’t realize the benefits plans provide.

The reason is the real estate sales business is full of distractions.   These distractions often come disguised as opportunities so the agent doesn’t recognize them as something harmful.  But they are harmful because they rob the agent of their most precious resource . . . time.

  

I’ve written two books on business planning (‘Planning For Success in Real Estate Sales’ and ‘Business Planning For Real Estate Agents’).  These books have sold well, been enthusiastically reviewed, and helped hundreds of agents around the country.  But making plans is only half the battle.  The other half is implementing that plan.

My latest book teaches how to do just that.  Using a process that I developed more than 20 years ago and have used successfully with dozens of agents, ‘The 30 -Second Time Out’ is an effective method for ensuring you stay on track.  It costs nothing and takes only minutes.

The Kindle, print, and audiobook versions are all available on Amazon.com.  You can also find he audiobook on iTunes and at Audible.com.

I’ve arranged with Amazon to make the Kindle version free for the next two days (June 14 and 15). Just click here.

We are fast approaching the mid-point of 2019.  It’s natural that you would want to assess your business to see if you are on track. This book will help you.  

Why Don’t More Real Estate Agents Do This?

One of the simplest and most effective actions a real estate agent can take to grow her business is identify the origin of her relationships with clients. 

Why is this important? Because by understanding where your clients come from you learn three things:

1.     What systems are working for you,

2.     What systems are not working for you and need improving, and

3.     What systems are you not using that could provide more client opportunities

Before we look at each, let’s define what a system is.  A system is simply a series of actions you take that are intended to achieve a desired outcome.  For our purposes, the desired outcome is establishing new relationships with buyers and sellers.  You might have systems that involve direct mail, open houses, calling FSBOs or Expireds, leveraging your sphere of influence, and more.  

If you are like most agents, the majority of your business comes from your sphere of influence, i.e. people you already know.  You may have an extensive system in place for working this system (monthly mailings, twice a year phone calls, annual customer appreciation event) or your ‘system’ may be just answering your phone when someone calls you.  (In a future blog I’ll share the specifics of some very effective systems).

Make a list of every listing you have taken this year as well as the name of every buyer you took out to see houses.  Then mark next to their name how you met them.  Maybe they were a past customer.  Perhaps they came to your open house.  They may have called you after getting a Just Sold postcard.  Whatever it was that caused them to meet you, mark it down.

To see how we use this information, let’s look at a fictional agent who has taken 10 listings and worked with 8 buyers.  Here’s what her analysis revealed:

Sphere of influence – 10

Ad response (a call on her listing) – 2

Paid Internet lead – 4

Open house – 1

Office referral – 1

Her sphere of influence provided 10 clients.  That’s great. What did she do to make this happen? If she has done nothing, she should be encouraged. By adding some purpose and structure to this system, she should be able to develop more opportunities from her SOI.

Let’s look at her open house results.  She got one. If she did only one open house, that’s not a bad result.   The next question would be, ‘Why didn't she do more?’  But what if she did 15 open houses?   Clearly her open house system is underperforming and she is doing something that needs improving.  

There’s no business coming from direct mail.  Is that because she doesn’t do any direct mail or is it because her direct mail program is poorly done?  By answering that question she'll not only save money on ineffective mailings, but she will be more effective with the money she does spend.

Most agents take whatever comes their way, just happy to have a client.  The effective agent monitors where your business is coming from as it is the best way to identify what you are doing well, what needs improvement, and what else you can do to establish more relationships.

Action Step:  Make a list of your buyer and seller opportunities for 2018.  Then identify the source of the relationship.  If what you need to do next isn’t obvious to you, send me your list and I’ll help you interpret the results.

If you enjoyed this blog you’ll also like my book, “Never Try To Negotiate With A Drunken Homeowner . . . and 800 Other Things Every Real Estate Agent Should Know”.  The book is available in print, Kindle, and audiobook formats at Amazon.com.  The audiobook is also available at Audible.com and iTunes.

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Why is September the Most Important Month For A Real Estate Agent?

Every month is important when you are a real estate professional but if one were more important than the others it would have to be September.  Why?  Because September is when you should create your business plan for the next year.

The new year for real estate agents doesn’t begin on January 1; it begins on October 1.  The listings you take, the buyers you begin to work with – all will close after the first of the year.  So you want to be doing the right things now so you begin the new year with a good inventory of listings, buyers, and transactions on the way to closing.

An effective business plan is comprised of three components:

1.     Goals – You want to identify what success looks like. Be specific.  Your goals must be measurable (not “I want to make a lot of money” but “I want to earn $150,000 next year”)

2.     Systems – At its core real estate is about creating relationships.  So you should be doing activities that put you in front of potential buyers and sellers. These activities – if they are organized and well thought out – are systems.  Direct mail, open house, working your sphere of influence, FSBOs and expireds can all be systemized.

3.     A Means For Staying on Track – It does you no good to have goals and effective systems if you don’t do what you need to do. Having a coach or someone else to keep you on your path is crucial to your success

There are several good books on business planning for real estate agents available at Amazon.com including two written by me.  You’re welcome to buy them at Amazon or just email me back by August 30 and I’ll send you both for free.